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James Murdoch Predicts More Consolidation in Pay TV Sector

At a cable industry gathering in Barcelona, the 21st Century Fox deputy COO also argues for the benefits of channel bundling, despite increased competition from the Internet and streaming video services.

BARCELONA – The international pay TV sector has much growth left in it, but will see further consolidation, James Murdoch, deputy COO of 21st Century Fox, told a cable industry conference on Friday.

"Pay television in all markets is tending toward scale. There will be more consolidation in both upstream and downstream operations, and ultimately the customers will be fundamentally better off," he said.

In an interview session with CNN business news anchorwoman Nina dos Santos at the annual cable marketing conference organized by the Cable & Telecommunications Association for Marketing, Murdoch said the sector was seeing more technological innovation and wider programming choice.

Bundling of channels, he argued, drives up television consumption "and the more bundling you have, the more people watch your channels."

"But, of course, one big challenge facing us all in this is the discovery issue. In other words, how to let the consumer know what's available in the package they have purchased and on the device they are using," he explained.

Pay television operators are providing customers with an unprecedented choice and assisting them in making it easy for them to select what they want to see when they want to see it is key to meeting consumer expectations.

"It has to be made simple because we have to remember that there is a lot of diversity in each household regarding viewing habits and there is even diversity within individual viewers," he said.

"Our starting point is content because our business is about selling the consumer what they want. For example, our FX channel has been a driver of prime drama on televisions and we are very proud of that."

Murdoch's 21st Century Fox, which split off from News Corporation's newspaper and publishing business earlier this year, operates or owns stakes in the media giant's entertainment and news group's satellite businesses which include Star TV in Asia, BSkyB, Sky Italia, Sky Deutschland and the cable companies Fox News, FX Networks and Fox Sports 1. Murdoch is chairman and CEO of 21st Century Fox's international operations, while his father, Rupert Murdoch, remains at the helm of the company overall.

"We are seeing geographical growth across all our markets and it is very healthy in places like Latin America and India," he said. "Even in the United States it is in the low teens."

Murdoch pointed out that in Europe, which is suffering through its worst recession since the postwar years, the sector also remains buoyant. "Things look pretty good. Italy has seen some problems but we've been profitable all along.

"The key strategy there and everywhere else for us is to serve your customers well and you will do OK."

Murdoch stressed that the pay television sector has nowhere else to go but forward as people all over the world are moving from analog television to digital, from free television to pay TV.

"All surveys show this, that pay television consumption is rising despite competition from alternatives like the Internet and Facebook. And the aim of every cable and satellite company is to go after the national telecom companies' customer."

Another key strategy for his company, he said, was providing satisfactory customer service which he described as "fundamental."

"If you get the service you are providing to a customer right, then costs go down and you can spend the savings on your content, which in turn brings in more customers.

"The product is getting better, television has never been as good as it is now. It's an incredibly exciting time in innovation, investment and creative content in the pay television industry," he said.